Question

Calculate the value of each of the bonds shown in the following​ table, all of which pay interest semiannually.  ​(

Bond	Par Value		Coupon interest rate		Years to maturity		Required stated annual return		Copy to Clipboard + Open in Excel +
A	​$1 comma 0001,000		88	​%	1111		99	​%
B	500500		1212		2020		1111
C	100100		1414		44		1414

The value of bond A is

​$nothing .

​ (Round to the nearest​ cent.)

Answer 1

The Value of Bond-A

The Value the Bond is the Present Value of the Coupon Payments plus the Present Value of the Face Value/Par Value. The Price of the Bond is normally calculated either by using EXCEL Functions or by using Financial Calculator.

Here, the calculation of the Bond Price using financial calculator is as follows

Variables	Financial Calculator Keys	Figures
Face Value [$1,000]	FV	1,000
Coupon Amount [$1,000 x 8.00% x ½]	PMT	40,
Market Interest Rate or Required Rate of Return [9.00% x ½]	1/Y	4.50,
Time to Maturity [11 Years x 2]	N	22
Bond Price	PV	?

Here, we need to set the above key variables into the financial calculator to find out the Price of the Bond. After entering the above keys in the financial calculator, we get the Price of the Bond = $931.08.

“Therefore, the Value of Bond-A will be $931.08”